Securities can be divided into two basic groups:
- Stocks (shares) – represent a degree of ownership.
- Bonds – represent debt obligation of the issuers of the bonds.
There are two main type of stocks:
- Common shares
- Preferred shares
“Stock Certificates” are the paper representation of en equity ownership interest in an incorporated company.
- Private Corporation – the stock is usually owned by a small group of person and is not traded with members of the public.
- Public Corporation – the stock is usually available for sale to the general public, via a stock exchange or the over-counter-market.
All corporations are authorized to issue stock (shares) and may be also authorized to issue debt-type securities, such as bond.
Authorized stock (capital stock) is the maximum number of shares the corporation may issue or sell. Any authorized stock that was not sold is commonly referred to as unused stock, or treasury stock. Issued stock is authorized stock that has been sold to an individual person or other corporation. Individuals who buy shares of stock are known as shareholders.